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“Suggestions For Enhancing The Effectiveness Of Cooperation On CLP Issues At Regional Level: Lessons From Turkey” : “Suggestions For Enhancing The Effectiveness Of Cooperation On CLP Issues At Regional Level: Lessons From Turkey” Yaşar TEKDEMİR Director of International Relations Turkish Competition Authority İstanbul- 01.08.2006 International Seminar on “Competition Provisions in RTAs” Co-Organized By UNCTAD, Yeditepe University and IDRC
Content: Content Introduction, Types of Cooperation on CLP Issues at International Level, - Soft Cooperation - Hard Cooperation Experience of the TCA, - Experience of Soft Cooperation - Experience of Hard Cooperation: The examination of Seized (Pieced) Coal Market Case Suggestions
1. Introduction: 1. Introduction No attempt to discuss the importance of international cooperation on CLP issues, Purpose: To bring proposals considering the Turkish experience, The discussion to be on seized (pieced) coal market case.
2. Types of Cooperation: 2. Types of Cooperation Soft Cooperation: Means the cooperation which enables the CAs to share information on theoretical works and practical experience. Takes place in UNCTAD, OECD, ICN, WTO (!). Takes place via RTAs (multilateral, regional and bilateral). ATAs. Hard Cooperation: Means the cooperation which enables CAs to cooperate in enforcement of actual cases. Requires CAs to exchange for data and information about an actual case, to conduct dawn-raids etc. Takes place rarely in compare to soft cooperation (OECD, RTAs, ATAs etc). Leads certain concerns for the requested CAs.
3. Experience of Turkey: 3. Experience of Turkey Experience of Soft Cooperation, Experience of Hard Cooperation,
3.1. Soft Cooperation Experience: 3.1. Soft Cooperation Experience International Organisations: OECD-Competition Committee Meetings, UNCTAD-IGE and Review Conference, WTO-WG on Competition Policy, ICN-WGs on Cartel, Mergers, Unilateral Conduct, etc. RTAs Customs Union Decision 1/95-recently in parallel to negotiation process FTAs- Only with respect EFTA, ATAs Korea and Romania.
3.2. Hard Cooperation Experience:The Seized Coal Market Case: 3.2. Hard Cooperation Experience: The Seized Coal Market Case Facts of The Case: Complaints regarding the sharp increases in coal prices. The preliminary investigations demonstrated that the increase in domestic retail prices had resulted from the systematic increases in the prices of imported coal. It was seen that the price increases were associated with the price fixing by Krutrade AG, Mir Trade AG, the subsidiaries of Glencore International AG which are Glencore İstanbul Madencilik Ticaret A.Ş. and Minerkom Mineral ve Katı Yakıtlar Tic. A.Ş. The investigation started on 3rd of June 2004 .
3.2. Hard Cooperation Experience:The Seized Coal Market Case: 3.2. Hard Cooperation Experience: The Seized Coal Market Case Facts About the Undertakings: Mir Trade AG: Based in Switzerland, no office when the investigation initiated, but opened an office during the investigation. Krutrade AG: Based in Austria, Had office when the investigation initiated, Closed office during the investigation. Glencore Istanbul and Minerkom Mineral (Subsidiaries of Glencore International): Based in Turkey
3.2. Hard Cooperation Experience:The Seized Coal Market Case: 3.2. Hard Cooperation Experience: The Seized Coal Market Case The Final Decision Dated 25.07.2006 (Almost more than 2 years later after the opening of investigation): The evidence against Mir Trade AG was not sufficient to conclude that it did infringe the Article 4 of competition act, Krutrade AG, Glencore İstanbul Madencilik Ticaret A.Ş. ve Minerkom Mineral ve Katı Yakıtlar Ticaret A.Ş. infringe Article 4 of the competition act by fixing price, However, no final decision about Krutrade AG due to the fact that investigation report not to notified properly and officially to Krutrade AG; Regarding Glencore İstanbul ve Minerkom Mineral. which are in an economic unity, on the basis of 1 % of their turnover in 2003, respectively a fine of 20.363,24 YTL and a fine of 823.194,91 YTL, are to be imposed on each firm for infringing Article 4 of the competition act.
3.2. Hard Cooperation Experience:The Seized Coal Market Case: 3.2. Hard Cooperation Experience: The Seized Coal Market Case A short evaluation: “Only the companies located in Turkey could be imposed a fine. Despite the fact that one of undertakings was found guilty, the TCA could not impose a fine as the procedure envisaged in the competition law was not completed properly. ”
3.2.1. The Need for Hard Cooperation: 3.2.1. The Need for Hard Cooperation The need for cooperation in the enforcement of competition law: The need for cooperation in terms of procedure (notification of investigation decision and investigation report etc.)
A. The need for cooperation in enforcement: A. The need for cooperation in enforcement The TCA felt the need for enforcement cooperation with the relevant agencies of the countries where these undertakings are located. What the TCA needed was basically the provision of information and documents which might be a proof for price fixing by the investigated undertakings. Tthe TCA asked the relevant agencies to cooperate with the TCA by conducting on-the-spot investigation or by other proper means in order for the TCA to have access to a sufficient set of evidence to support its case.
A. The need for cooperation in enforcement: A. The need for cooperation in enforcement The Legal Grounds for Cooperation Requests: The Customs Union Decision 1/95 for Krutrade AG located in Austria, (rules from Articles 32 to 43) FTA with EFTA for Mir Trade AG located in Switzerland (Article 17 on competition policy Article 23 on sanctions).
A. The need for cooperation in enforcement: A. The need for cooperation in enforcement The Responds of the Requested Agencies: For Krutrade AG under Customs Union; Austria: Referred to the European Commission, The European Commission: Rejected on the basis of ; No implementation rules for competition rules of the CU 1/95 Confidentiality, No effect in EU market, Article 43 is not sufficient, For Mir Trade AG: Switzerland:rejected No possibility of enforcing Swiss competition law for the case, OECD as a better place.
B. The need for cooperation in Procedural Issues: B. The need for cooperation in Procedural Issues The second initiative is the need for cooperation in procedural issues such as notification of investigation decision, notification of investigation reports to the undertaking in other countries. The key point here is basically to inform the investigated undertakings officially and to get their defence in order to complete the procedure. As the right to defence is quite important aspect of procedure followed during competition cases, the TCA attaches great importance on respecting for the right to defence.
B. The need for cooperation in Procedural Issues: B. The need for cooperation in Procedural Issues The Principles Governing the Procedure of the Turkish Competition Law: The deadlines which govern the investigation, Access to file, The right to defence, Impossibility of exploiting any evidence as a ground for decision about which the investigated party is not informed. The Important Stages of Procedure: the notification of investigation decision in 15 days following the decision date (to inform the undertakings and to allow them the right to defence-1st written defence ), the notification of investigation report (to allow them the right to defence-2nd written defence), the notification of additional opinion (to allow them the right to defence-third written defence), the notification about oral hearing.
B. The need for cooperation in Procedural Issues: B. The need for cooperation in Procedural Issues Notification directly to undertakings in Turkey. Notification indirectly (via the Ministry of Foreign Affairs) to undertakings not in Turkey. Result: For Mir Trade: The decision not to be notified, the report to be notified to its branch opened during the investigation. For Krutrade AG: The decision to be notified to its branch in Turkey, the decision not to be notified to its base in Austria.
B. The need for cooperation in Procedural Issues: B. The need for cooperation in Procedural Issues The Reasons for Failure to Notify: No direct international legal framework for competition related issues, The Ministry of Foreign Affairs not Accustomed to competition related issues.
B. The need for cooperation in Procedural Issues: B. The need for cooperation in Procedural Issues For Mir Trade AG; while the Turkish Embassy did try to communicate the decision to Mir Trade AG, it faced certain problems about the address and location of the company. As a result, the decision could not be notified. For Krutrade AG; The Austrian government did reject to communicate the investigation report arguing that there is not bilateral or multilateral agreement between the two countries which cover competition related administrative documents.
C. Implications of Lack of Cooperation for the Case: C. Implications of Lack of Cooperation for the Case On the Basis of the Final Decision Text: The first implication: The evidence against Mir Trade AG was not sufficient to conclude that it did infringe the Article 4 of competition act. This implication reminds us the importance of cooperation in enforcement. The second implication: Krutrade AG, Glencore İstanbul and Minerkom Mineral infringe Article 4 of the competition act by fixing price, however, no final decision about Krutrade AG due to the fact that investigation report not to notified properly and officially to Krutrade AG; This implication reminds us the importance of cooperation in procedural issues.
C. Implications of Lack of Cooperation for the Case: C. Implications of Lack of Cooperation for the Case On the Basis of the Final Decision Text: The third implication: due to failure of notification to Krutrade AG, the investigation did last more than two years, and unfortunately the case was partly finalized. The fourth implication: A pity fact can easily be seen from the decision that while companies located in Turkey are imposed fine the companies located in other countries are not imposed fine for whatever reason.
4. Conclusion and Suggestions: 4. Conclusion and Suggestions Soft Cooperation: The existing soft cooperation level is quite satisfactory (UNCTAD, OECD, ICN, RTAs), No suggestion.
4. Conclusion and Suggestions: 4. Conclusion and Suggestions Conclusion: Increasing Globalisation, Increasing Liberalisation, Changing Trade Patterns (use of ICT) altogether mean that competition issues also become global and international, Unless a proper framework for hard cooperation (enforcement and procedure) is in place, the life for CAs will be more difficult, It will be difficult to find evidence (cooperation in enforcement), In the absence of a proper framework for cooperation in procedure, the effect doctrine will be meaningful only on paper. Even if existing international legal framework is to cover competition related procedural issues, diplomatic channel is not suitable for competition issues, Competition policy requires a special framework for procedural issues.
4. Conclusion and Suggestions: 4. Conclusion and Suggestions Suggestions: Hard Cooperation: A desperate need for cooperation against cross-border competition issues First Suggestion: A solution to be found for cooperation in enforcement in actual cases; RTAs can be designed and the CAs can be more active in the design of RTAs for their needs, ATAs can be a convenient platform, UNCTAD and/or OECD could be a platfrom to design rules for that purpose, Confidentiality should be dealt with, However, it seems to be quite difficult.
4. Conclusion and Suggestions: 4. Conclusion and Suggestions Second Suggestion: A solution to be found for cooperation in procedural issues; RTAs can be designed and the CAs can be more active in the design of RTAs for their needs, ATAs seems to be quite agreeable for procedure purposes, UNCTAD as a UN institution could be a platfrom to design rules for that purpose, The framework to be agreed should be free from the diplomatic channels for urgency reasons. In compare to enforcement, an agreement on procedure seems to be more likely.
Thank You for Your Attention: Thank You for Your Attention Contact Info: Yaşar TEKDEMİR Adress: Rekabet Kurumu (Competition Authority), Bilkent Plaza B3 Blok, Bilkent/ANKARA Tel: +90 312 291 4310 E-mail: ytekdemir@rekabet.gov.tr

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